Private investment in student accommodation hits £840m

Private sector investment in the student accommodation sector in 2011 was more than double 2009 levels, according to research which suggests that the sector is so far escaping uncertainty affecting the wider higher education market.

Research by CBRE, published today, estimates that £836m of capital was committed to investment and development in student accommodation in 2011, up from £350m two years ago.

CBRE found that occupancy rates in student accommodation averaged at 99% across the UK, indicating the potential for further growth in development.

The organisation said that student accommodation has proved popular with investors attracted by “stable annual income and positive yield movements” over the last year. However, it added that it was becoming increasingly difficult to secure debt funding on schemes that do not have a pre-let arrangement in place, meaning that investors are focusing on secure schemes that are well located and have long-term agreements with universities.

Jennet Siebrits, head of residential research at CBRE, said: “Any uncertainty in the wider higher education market is not reflected in the accommodation sector. Student accommodation is more attractive than many other asset classes in the current climate and we have seen increasing interest from relatively new parties seeking to diversify their portfolios.

“While investor appetite will remain strong next year, it is narrowing its focus on well-located schemes that have long-running agreements with good universities.”